Bureaucratic reform is part and parcel of Prime Minister Junichiro Koizumi’s structural reform agenda. As he puts it aptly, the basic idea is to “let the private sector do what it can do.” Bureaucratic reform is also about decentralization: “letting local governments do what they can do.”

A bloated and inefficient bureaucracy makes it difficult to reflect the voice of the people in public policy. Therefore, constant efforts must be made to build a slim and efficient bureaucracy that is more responsive to the needs and wishes of the public. A leaner bureaucracy is also needed to establish higher levels of administrative transparency.

The government’s latest plan for administrative reform, approved by the Cabinet Friday, marks another milestone on the road to small government. The new “Administrative Reform Outline” — the first in four years — rightly emphasizes the continued need to improve the ways of implementing administrative and fiscal policy, and to promote transparency in government.

First, the new outline calls for a review of the changes that have been made since the major reorganization of the central bureaucracy in 2001. Among the items up for scrutiny are administrative structures and systems governing the central and local governments, the vast network of public corporations, and the policy-evaluation program. On that basis, the guidelines give priority to staff reductions and reassignments, and to the streamlining of public-interest organizations.

Along with the administrative reform guidelines, the Cabinet approved the government budget plan for fiscal 2005. The budget includes austerity measures that will directly hit the pocketbooks, such as the halving of the flat-rate tax cuts for national and local incomes. Further down the road, an increase in the consumption tax rate is considered a near certainty. The government, however, should cut its own running costs before imposing a higher burden on the people.

How does the outline measure up from this point of view? First, it says the number of national civil servants should be cut by more than 10 percent (about 33,000) in the five years from fiscal 2005. Over the past several years, the government payroll has diminished considerably, thanks largely to the creation of Japan Post, a public corporation, and the incorporation of national universities. A further reduction should be made by other means, including the expansion of the network of online administrative services.

The central bureaucracy, which is “vertically integrated,” is said to lack “horizontal” coordination. This makes a strong case for staff reassignments across ministerial lines. In reality, though, such horizontal transfers are rare. As the outline points out, it is necessary to assign more personnel to the law-enforcement and tax-collecting departments where staff shortages are evident.

As for reform of the civil service, the government plans to introduce a merit-oriented evaluation system in fiscal 2005 on an experimental basis. This system represents a compromise with labor unions, which are opposed to drastic changes to the traditional seniority-based personnel system.

The planned system is a setback to the original plan that linked promotions directly to ability and performance. The unions, concerned that promotions might be decided on the basis of “unilateral” evaluations by ministries, are demanding a right to conclude collective contracts aimed at preventing such discretionary promotions. Under current laws, employees in general administrative positions are not permitted to conclude such contracts.

Government officials say the merit system will not be linked directly to promotions during the trial period. However, once it has proven its effectiveness, the system will be fully implemented. Before that happens, however, employers (the government) and unions should conduct an in-depth debate on the basic labor rights.

Regarding reform of public-interest corporations, the outline calls for the creation of a new system of not-for-profit corporations that would replace the present system of “shadan” and “zaidan.” Establishing such corporations will require only registration. From among the registered nonprofit corporations, those eligible for tax exemption will be selected on the basis of recommendations from a committee of experts, which will be created within the Cabinet.

The changing times make it essential to incorporate in the socioeconomic system public-interest organizations that fill the needs that administrative and private organizations cannot. The task for the committee is to judge objectively, outside the control of bureaucrats, whether organizations applying for tax breaks actually serve the public interest.

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